A new method to determin an optimal retry policy and for use in retry of fault characterization is presented. An optimal retry policy for a given fault characteristic, which determines the maximum allowable retry durations to minimize the total task completion time was derived. The combined fault characterization and retry decision, in which the characteristics of fault are estimated simultaneously with the determination of the optimal retry policy were carried out. Two solution approaches were developed, one based on the point estimation and the other on the Bayes sequential decision. The maximum likelihood estimators are used for the first approach, and the backward induction for testing hypotheses in the second approach. Numerical examples in which all the durations associated with faults have monotone hazard functions, e.g., exponential, Weibull and gamma distributions are presented. These are standard distributions commonly used for modeling analysis and faults.